A U.S. judge said on Friday she is considering imposing tough
restrictions on Apple Inc for illegally conspiring with publishers to
raise ebooks prices.
U.S. District Judge Denise Cote said she was
weighing whether to restrict Apple for five years from entering deals
with publishers that would prevent Apple from discounting ebook prices.
Apple, the maker of the iPad and the iPhone, had as part of the alleged
conspiracy given publishers control of pricing.
"My focus is on making sure we don't have collusive illegal activity again interfering with the ebooks market," Cote said.
Cote, a judge in U.S. District Court in Manhattan, indicated she may
not give everything sought by the U.S. Department of Justice and 33 U.S.
states and territories, saying she may not require Apple to employ a
court-appointed external monitor.
The Justice Department, which
sued Apple in April 2012, claims the company conspired with major
publishers to undercut the prevalent ebook pricing set by Amazon.com
Inc, which at the time controlled 90 percent of the ebook market.
As a result, prices for new and best-selling ebook titles rose from $9.99 to $12.99 or $14.99, the government contends.
July, Cote found Apple liable for violating federal antitrust laws,
saying the company played a "central role" in the conspiracy with the
five major publishers, which agreed in settlement to pay $166 million to
The publishers include Lagardere SCA's
Hachette Book Group Inc, News Corp's HarperCollins Publishers LLC,
Penguin Random House LLC, CBS Corp's Simon & Schuster Inc, and
Verlagsgruppe Georg von Holtzbrinck GmbH's Macmillan.
government is now seeking an injunction against Apple. The company calls
the Justice Department's proposal a "draconian and punitive intrusion"
into its business.
At the hearing Friday, Cote said she was
considering restricting the types of contracts Apple that could enter
with the publishers for five years, a goal sought by the Justice
The judge said for the first two years, Apple would be
prohibited from entering contracts that restrict its ability to
It would then on a staggered basis begin
negotiating new agreements with publishers, with talks roughly half a
year apart, she said.
"This means at no one point in time will Apple be able to renegotiate with all the publisher defendants at once," she said.
the Justice Department's proposal, Apple would also have to hire a
full-time internal antitrust compliance officer and for 10 years use a
court-appointed external monitor to ensure its compliance with whatever
Cote said her preference was to instead not require a
monitor, but instead require Apple to have a "vigorous" in-house
antitrust compliance program.
"I don't want to do more than is necessary here," she said.
Apple is planning to appeal Cote's July ruling on liability, a point its lawyer emphasized Friday.
declined to put the case before her on hold pending appeal, though, and
began scheduling proceedings that could ultimately lead to a damages
Lawyers for the states and consumers haven't yet publicly
alleged the damages suffered. Orin Snyder, a lawyer for Apple, at the
hearing said damages could reach the "hundreds of millions of dollars."
a hint of the fights to come, Synder said Apple intended to oppose
certification of a class action brought by consumers, citing recent
major U.S. Supreme Court rulings that have limited the ability of
plaintiffs to litigate as a group.
"It's a brand new world in scrutinizing these kinds of alleged class injuries," Snyder said.
The case is U.S. v. Apple Inc et al, U.S. District Court, Southern District of New York, No. 12-02826.
© Thomson Reuters 2013